Shifting sands: will Hulhumalé project ease pressure on the Maldives?

With capital Malé overcrowded and the rest of its population scattered across almost 200 islands, providing key services to the people of the Maldives provides the country's authorities with a headache. With this in mind, the government has been developing a 'second city' on an island near Malé, in which it hopes a large number of Maldivians will choose to live. Natasha Turak reports.

The Maldivian capital of Malé, with an area of 5.8 square kilometres and a population of more than 130,000, is one of the planet’s most densely populated cities. With the aim of relieving Malé’s congestion and housing crises, for two decades now the government has been developing a second city – the reclaimed island of Hulhumalé, 4 kilometres from the capital in North Malé Atoll.

Phase one of the project began with land reclamation in 1997. In 2002, 188 hectares of land was ready for development and two years later the island celebrated its first settlement of 1000 residents. Today the island is home to about 40,000 people, and phase two of reclamation – named the ‘Youth City’ and consisting of another 244 hectares of land – was completed in 2015.

Something different

The government’s ultimate goal is to bring 240,000 residents to Hulhumalé, enabling it to house two-thirds of the Maldives' population. More than just housing, the new island city’s master developer, the Housing Development Corporation (HDC) – a state-owned enterprise – envisions Hulhumalé as a place to live, work and play.

“We focus on four key areas,” says Mohamed Saiman, managing director of the HDC. “These are: residential solutions with different types of housing including social, mid-range, and luxury; creating employment opportunities of up to 90,000 jobs; providing open space averaging at least 2.5 square metres per person [about three times that of Malé]; and the concept of ‘play’, where people can enjoy themselves in green spaces, parks and sports facilities. And we are trying to provide enough investment opportunities to give young entrepreneurs successful business prospects within Hulhumalé.”

Mr Saiman adds: “The Maldives is known for its tourism business, but now we are trying to offer something different. We have a wide range of products that includes everything you can see in a developing city. For Hulhumalé phase two, investment opportunities include planned developments in hospitality, education, business parks, hotels and shopping malls.”

FDI requirements

The state is providing the infrastructure and utilities for FDI to come and develop commercial facilities, according to Mr Saiman. Over the past month alone, the HDC has been negotiating about $1.2bn in investments, primarily in real estate, and it calculates the total amount of FDI needed to complete phase two may exceed $10bn over the next decade.

Diversification is a key target in the city’s projects. In addition to a new yacht marina and cruiseliner terminal widening tourism opportunities, Hulhumalé already hosts a completed industrial processing zone, now the site of a significant portion of the country’s fish and agriculture product exports.

“We are targeting value creation,” says Mr Saiman. “For the purpose of special economic zones [SEZs], we are planning at least three zones: an IT park, a knowledge park and a financial centre. Each zone should [provide] 10,000 to 12,000 jobs.” In addition to pre-designated zones, Maldivian law allows the creation of SEZs in many sectors where a foreign investment exceeds $150m.

“We want to make the Maldives a hub for offshore financial services,” says Ahmed Munawar, the country's minister of finance. “We already have the necessary infrastructure and a highly educated young workforce that can be trained.” Attracting banks and other firms would create high-value jobs to further incentivise migration to the new city, he adds.

Housing hopes

When it comes to housing on Hulhumalé, minister of housing Mohamed Muizzu says: “We need to rely on FDI for a large chunk of all the infrastructure and housing projects we carry out. The social housing projects now completed or nearing completion are directly funded by foreign governments, mainly Chinese.”

More than 2000 social housing units have been completed, with several thousand more in the pipeline through a concession loan from the Export–Import Bank of China. The free and subsidised housing offers rent-to-own programmes, aimed at incentivising people from more remote islands to move to Hulhumalé. An additional 15,000 housing units were signed with companies from China, South Korea and Sri Lanka, among others.

“So there is huge foreign involvement,” says Mr Muizzu, “which is very important because at the moment that’s the only way we can go ahead.”

Mr Saiman adds: “We have investors from India and Singapore as well. They come as contractors or develop their property and they sell it on their own. They take their own rates. With government-supported housing, they bring their own finance, develop it and then sell it to the government.”

Just 15 minutes from Ibrahim Nasir International airport, a 20-minute boat ride to most of the country’s top resorts and strategically located along busy Indian Ocean trade routes, the budding city is well connected for regional business. Already the State Bank of India and Qatari telecoms giant Ooredoo are planning their Maldivian headquarters in Hulhumalé. Further investor benefits include zero income tax, extended lease and investment recovery grace periods, and access to a young, educated and English-speaking population.

In better health

While basic healthcare is provided in the Maldives, for more complicated procedures, including major surgery and cancer treatment, locals currently travel to Sri Lanka or Malaysia. Private investor Tree Top Investments, a collaboration of four Maldivian companies predominantly rooted in tourism, is now developing the first hospital of its kind in the Maldives, in Hulhumalé.

“If you look at the statistics of this country, there is so much foreign currency outflow and the major reason is healthcare,” says Adam Saleem, director of Tree Top Investments. “What we are trying do is allow Maldivians to access top-quality healthcare in their own backyard. We want to bring a service orientation to healthcare, one that I don’t believe exists here.”

This means incorporating the customer-centric service integral to the country’s tourism industry. When completed in September 2017, Tree Top Hospital’s services will include cardiothoracic surgery, oncology, a 24/7 service and a fully fledged catheterisation laboratory.

The six-floor facility will be joined by an administrative building and will ultimately hire 900 staff, at a total investment of about $110m. Tree Top Investments has also signed a management contract with Australian-Malaysian joint venture Ramsay Sime Darby Health Care to provide the necessary doctors and specialists. “The Maldives needs this project in order to grow tourism,” says Mr Saleem. In [tourism-reliant] countries around the world, invariably you have good, patient-centric health infrastructure. We can provide that.”

Hulhumalé is critical to attempts to centralise the Maldives’ highly dispersed population, which is scattered across more than 185 islands, and for whom providing public services is a massive drain on state resources. Roughly half of the inhabited islands lack proper sewage systems, and many face coastal erosion.

“For the past several years we have added land to these identified urban islands with the hope of inviting smaller islands to move, so that they can access better housing, quality healthcare, education and jobs,” says Mr Muizzu. “We never move by force, we just give incentives. It’s a long process but a very important target to achieve, because only then can we achieve sustainable development in the country.”

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